For the quarter ended December 31, 2012, Microsoft reported a 2.7 percent boost in revenue to $21.5 billion from $20.9 billion in the year-ago quarter. However, the Windows maker saw a 3.7 percent drop in profit to $6.38 billion (76 cents a share) from $6.62 billion (78 cents a share) one year ago.

Microsoft saw a revenue increase of 24 percent in its Windows division to $5.88 billion (or 11 percent when adjusted for early sales of Windows 8) for the second quarter, which was the first to include Windows 8.

Microsoft didn't offer sales figures for its first homemade tablet, Surface with Windows RT. The new version -- Surface with Windows 8 Pro -- is expected to hit store shelves on February 9.

“Our big, bold ambition to reimagine Windows as well as launch Surface and Windows Phone 8 has sparked growing enthusiasm with our customers and unprecedented opportunity and creativity with our partners and developers,” said Steve Ballmer, CEO at Microsoft. “With new Windows devices, including Surface Pro, and the new Office on the horizon, we’ll continue to drive excitement for the Windows ecosystem and deliver our software through devices and services people love and businesses need.”

Windows 8, which was released in late October 2012, was met with plenty of criticism for its massive redesign. However, many PC makers (such as Dell) were hoping that it'd be the saving grace for the PC market, where hardware sales had been declining over the years as mobile devices (smartphones and tablets) exploded onto the scene.

But many PC makers didn't see a huge increase in sales with Windows 8. And while Microsoft hasn't released sales figures for its Surface tablet yet, reports last month indicated that the new device took a sales hit due to a lack of distribution. Microsoft had only offered the Surface with Windows RT online and at Microsoft stores (and there are a little over 60 stores total in the U.S.).

In mid-December, Microsoft finally allowed third-party retailers to sell the Surface. Surface with Windows RT also made its way to Australia in mid-December, and will do so in other countries in the following months.

In today's financial earnings report for Q2, Microsoft also announced declines in its Entertainment and Devices division (including Xbox) of 11 percent to $3.77 billion and its Business division (including Microsoft Office) of 10 percent to $5.69 billion from a year earlier.

Microsoft's shares were down 2.1 percent in after-hours trading today to $27.63.

Windows 8 Clover Trail tablets are the only original and sizable competition to iPad at the moment. Capable of running touch metro apps as well as old Windows non-touch apps like Outlook etc.

There's no other OS that combines this ability on the market. You can't have a slick thin/light multitouch tablet plus a fully featured x86 Windows PC in one small device with iOS or Android. And the situation will drastically improve with Haswell based Surface Pro 2 next year. Although even now the Clover Trail based tablets are quite competitive with iPad as is. They just need more high end 3D games like Dead Trigger to finally catch up to iOS.

Nobody is willingly acquiring this piece of shit, they are forced onto it with new computers, most of which are then downgraded to a proper OS like Win7. All those licenses "sold" m$ claims are just new installs on computers yet-to-sell or not really in use anymore after purchased off retailers.

Same here. I was scared at first after reading a lot of negative reviews but after experiencing Win 8 for a couple of weeks on both my lappy and my tablet I realized that those negative reviews were written by oldfags and similar kind of idiots who still use MS-DOS or Win95 :)))

I did an upgrade on my gaming PC last week and used that as opportunity to do a clean install of Win 8 on that machine, too. So I am completely Win 8 now and very happy with it. Next step, WP8 and probably Win 8 tablet (ThinkPad Tablet 2 looks nice).

I am taking the wait and see approach. I think it is the market that will tell not opinions voiced in here. I can't predict how everyone other than myself will react to Windows 8.

I've used Win8 for a couple months and never gained a liking for it. I much prefer using Windows 7. I won't go so far as to say Win8 sucks, I only find it less suitable for the things I do with computers than its predecessor.

Others, or even the majority may not share this view. I can only speak for myself in that I prefer an OS that is tailored to the kind of device I am using it on. I'm not a big fan of the "Jack of all Trades, Master of none" approach to operating systems. I much prefer an operating that is specialized and very good at handling my needs without being bloated with things I don't need (i.e Metro). I also like my OS to look good. IMHO Win-7's Aero Glass GUI is far nicer to look at than Win-8's Metroish flat graphic desktop. Sorry Microsoft, but IMO you had a winner with Aero. I really don't like what you used to replace it.

I understand Microsoft's financial dream of getting everyone hooked on their Microsoft App store (to me this is the #1 reason why this whole Metro thing is included in Win8). There is a lot of money to be made from that market -- to the right customers. I just don't expect to see a lot of desktop users making much use of it though tablet and phone users will use it extensively.

What I don't get is this: Microsoft already has a separate tablet/phone oriented OS called Windows RT. Was it really necessary to put the RT features into Win8 just for the possibility of gaining desktop user's custom into the MS App store?

I agree with this assessment. In an earlier forum discussion I talked about the problems that I was having with Win 8 (For me it was app compatibility, bluetooth, updating issues, and just general bugginess) and I solved some of the problems. Unfortunately Win 8 users aren't as good as Linux users, if you have a problem with Linux you simply start a thread "I hate win 8 because of..." and you will have all of your problems solved, here it was mostly "deal with it" or "I didn't have that problem". I do appreciate the help of a user that mentioned that you can load Win 7 drivers (fixed my bluetooth problem).

Anyways, after playing around with it I managed to make my computer start up in no time flat and made it run smoother and faster, but I still couldn't get my Zune software or Audials to work on it. I realize that I am one of 6 people that use the Zune, but I love the thing and I prefer the software over Xbox Music. As for Audials, I bought version 8 years ago, then I just bought version 9 a couple months ago. Just after Win8 was released they fixed the issue and called it version 10 and their response is to buy the new one...F@%# them.

I decided to add a second hd to my laptop in raid 0 configuration and just for fun loaded Win 7 onto it (by that I mean I initially went to reinstall Win8 but because I created the usb install on my other laptop it wouldn't install due to their antipiracy crap, so I put on 7 first). I did this about a week ago and it has been running so smoothly and without a single issue that I don't think I'm going to upgrade it back. I will wait and see what happens with it though, but I personally prefer 7, the experience is magnitudes better. It takes longer to boot, but since I rarely start it up (maybe once a week or 2) its not really an inconvenience.

http://www.stardock.com/You can download Windows 7 desktop themes with aero glass.You can keep these background image Under metro.You can disable metro and have a start button if that's your thing.But you miss out on all the improved OS and the apps.Netflix app, Hulu, Youtube, they all work better than the website version. Windows 8 for HTPC rocks.

Disagree. Netflix Metro is half baked and nowhere near as flexible when it comes to finding or browsing for movies, I feel the same for the YouTube app. Can’t comment on the others as I didn’t use them before going back to Win 7,

I had to use the Metro Netflix app though as none of my browsers seem to work with win8 and MS Silverlight BS. (Well it worked for a week and then gave DRM errors in everyone of my 3 different browsers) Netflix couldn't figure it out either. I fixed the problem by reverting to Win 7 now all is as it should be. Working!

It's an adjustment, but it is by far the best version of Windows yet. The problem is, most people don't care and think Windows 7 is fine. I still have people tell me how much they miss XP. I'm like, seriously?

I still prefer Windows 7 over Windows 8, but if it came down to using a touch interface for my home computer I would easily make the transition. I just have no need for a Windows 8 tablet, and since neither my laptop or computer have touch screens I will stick with Windows 7. Just personal preference on that front.

I think not. For example, my work install was actually an upgrade over Win 7; I wanted to avoid reinstalling everything. Upgrade worked fine and boot time went down from a minute to 20s or less. System does feel a bit snappier. 7 was very busy after login, for example, and trying to execute application (Outlook, for example) took a lot of time before background loading was done. On 8, there is still HDD activity after login, but apps start much faster - it looks like 8 is prioritising app load to background loads.

Laptop (with SSD) and home PC are booting a few seconds faster, after a clean install.

Well like I just said, my work machine was upgrade (no clean install) from Win 7 back in early September. That is almost 5 months and install was not clean, but upgrade on top of 7 Enterprise. I haven't noticed any performance degradation - if it is there, it is still too small to be casually noticeable.

Windows 8 works fine on a telephone and may improve an older PC to curtain extent. Surface is flogging a dead horse due to being way to expensive for a tablet that runs MS OFFICE as the only reason to buy it when compared to other tablet offerings. If you can't draft a document using open office then you really have no idea of the power of the open tablet platforms and what the real world uses are. The metro UI is just silly on the standard PC monitor which comes with the standard Desktop purchase, why have a touch interface on a none touch screen. So on a desktop win 8 is rubbish, on a tablet it's more expensive then other tablets.PS. Your swearing and name calling is a reflection of the troll you are, or maybe you have been told that so many times yourself that it was the first thing that came to your tiny mind.

Last I checked a mouse pointer was more precise than your fat finger, so the Metro interface works just fine without a touch screen. Out of the 3 Windows 8 machines I have, only one is touch screen and I get along just fine on all 3 of them.

I don't know of anyone who has complained about the precision of the mouse in metro. I imagine most peoples' issues are with regard to not having an intuitive equivalent to many touch gestures. Things like pinch zoom, or just swiping from the sides of the screen.

Missing the start button is the least of the issues. Removing glass for that ugly squared flat color design was the worst move m$ ever pulled on the history of Windows. I could live with replacing the start button, in fact I did try it for a bit on my laptop, used some app to have a similar menu, boot directly into the desktop, still didn't convince me.

It won't even remember keyboard settings properly, install w8 in English, set your keyboard to JP, you will have to reinstall the keyboard driver after every reboot cause the layout will be wrong.

Faster? I don't think so, mostly the same as w7. Explorer and task manager sure were nice, but not enough to justify the big mess that is the whole rest of the OS. All the revamped settings areas are horrible, undocumented api changes breaking applications, lots of people unable to even change their account picture.. how freaking ridiculous is that.

Aero Glass vs 8 Explorer is a matter of taste. I greatly prefer the 8 look, I like sharp clean lines and crisp text. I like the square edge. Modern XP! I can understand liking the transparent border more I guess.

The rest seems to be the same whine you get from after any software update. Little bugs that get fixed before too long, but someone has to rant about it as if it's some huge deal. Not the Account picture oh no! IF I CANT HAVE A KITTEN EATING A CHEESEBURGER THERE IS NO POINT!

I think I can speak for at least a decent number of people when I say that part of the problem is not the removal of glass, but the execution and result of doing it.

The goal was to improve battery life and performance on tablets, thus in doing so, the powerful desktops owned by many enthusiasts were just ignored. Those powerful gaming grade PCs that are plugged into the wall do not benefit from such a change. Most of them could probably easily render several dozen, maybe hundreds of fullscreen quads of solid glass without as much as a hiccup.

The execution was also done poorly. Aero glass couldve easily existed alongside the new theme, or even simply disabled. A couple "if statements" scattered throughout the code could have easily achieved the same performance gain on tablets while retaining the ability to keep glass rendering in. Instead they actually took the much harder route and completely stripped glass from the codebase. A move that I'm sure took a while and caused many bugs along the way.

On top of that, the way they removed glass also disabled all transparency in the system except for the taskbar which has some special code to allow it to be transparent. This means that it's now impossible for custom themes to make use of any form of transparency without hacks - either system file modification or the well known bug that makes DWM skip the rendering of the solid area of the window borders, but leaves the borders 100% purely transparent, almost impossible to use, and causes buggy rendering upon moving the window.

In addition, this was all done after the release preview build. This would mean it would never make it into a public beta, meaning they wouldn't receive any feedback, providing no pressure on Microsoft to back off the change. It's interesting to go to the Building Windows 8 blog where they introduced this feature. Look through the posts that mention the removal of glass - the responses are overwhelmingly negative. One can attribute this slightly to the same "vocal minority" as all the posts regarding the start menu. The primary difference here is that this is a theme change, and thus is highly subjective, and poses no threat to keep around. It doesn't interfere with a core goals of the OS (functionality), whereas backing down on the new start screen would require a whole new approach to the OS. It can be supported alongside the new theme with no sacrifices.

That said, I'm disappointed at the loss of glass. It was actually my favorite feature of windows over the past 6 years, and I will miss it greatly. I simply hope they do not cripple the system any further. I can live without glass and transparency, but there is a point where it can be detrimental to my productivity, when things start feeling "unpolished" as opposed to simply being "cleaned up" and fast/smooth.

quote: the powerful desktops owned by many enthusiasts were just ignored

MS should have ignored enthusiasts much earlier, I'd say. 'Cause maybe they would be able to compete with Apple much better than they do now. Desktop market is a niche these days, not much money to be made there. All the profit is in small devices like phones and tablets. Hence the drastic breakthrough from MS, which is the transition to Win 8. This new OS is very heavily optimized towards mobile computing on tablets instead of being desktop centered like previous versions. MS is just going where the money is, and you can't blame them for that.

iPad is a very serious threat and I think Ballmer is quite smart doing all this huge transition with Win 8 and Metro. Just deal with it, get yourself a nice Clover Trail tablet like Asus Vivo Tab for $500 on newegg, and enjoy the progress. No one will take your desktop from you, this legacy stuff is here to stay and MS won't drop support for it, I'm sure. So don't worry about enthusiasts, they just don't matter now as a target market for MS.

Pirks, you have a very narrow view of the world if you think that only enthusiasts use powerful desktop and notebook systems. Walk into any bank or insurance company. What kinds of hardware systems are the folks in working in these using? Tablets?

You think software developers use tablets to write their code? You think the developers who wrote and maintain Windows 8 are using Tablets for their coding?

You think I am writing this on a Surface?

I can tell you this:

Tablet users are a minority out there not a majority. Many of the tablet users out there also use desktops and/or laptops.

Answer this: When someone is looking to buy a new computer, are they looking to spend their $500 on a 10.1" quad-core tablet with 2GB memory and 32GB storage, or are they going to spend it on a 16" quad core laptop with 8GB memory and 750GB storage? Hell, I know what I would spend my $500 on.

Most cell phone users use Android, not Windows or iOS.

You are calling desktops a niche market. I am calling tablets a niche market due to their horribly limited capabilities. And if you think they are not limited, try playing Skyrim on a "Surface".

quote: When someone is looking to buy a new computer, are they looking to spend their $500 on a 10.1" quad-core tablet with 2GB memory and 32GB storage, or are they going to spend it on a 16" quad core laptop with 8GB memory and 750GB storage?

Get a large heavy device with no battery life to surf the net/facebook/email/netflix/plants vs zombies/etc? Or get a thin light tablet with a couple of days of battery life instead? That's a freakin' tough question, man. I need time thinking about it :)))

quote: Most cell phone users use Android, not Windows or iOS

And most routers use Linux, so what?

quote: I am calling tablets a niche market due to their horribly limited capabilities

Who cares about your opinion? All corporations care about is $$$, and tablets and smartphones mean big $$$ these days, so deal with it.

quote: if you think they are not limited, try playing Skyrim on a "Surface"

I played a few shooters like Dead Trigger, Shadowgun and even medieval themed Inifinity Blade hack'n'slasher, after playing these I don't care about Skyrim or what not. You're seriously pushing an idea that Skyrim on an average/cheapo budget PC (that most people use at homes) looks any better than Infinity Blade on iPad 4? Dude, you gotta crawl outta your cave and say hello to reality! Really.

You know, I agree with you to a certain point. Tablets are an important and raising force in the computer/technology industry. Personally I run windows 8 on everything from my tablet to my htpc to my twin xeon 32GB desktop.

However, your comparison of a crappy tablet game (and yes, they're all crappy) to Skyrim is a mortal sin! You'll have to pry my skyrim from my cold dead hands! That said, even though skyrim is 5000% better on the PC, it can be had on the PS3 and/or XBox to those who don't care about free community mods and such. Skyrim is but one of many though. Battlefield 3, Call of duty, Crysis, etc all cream any "tablet/phone" game out there. I understand that I'm the exception, not the rule and that most people with a desktop probably use it for mp3s, facebook, school work, and minesweeper and could likely make due with a tablet easy. I have a tablet too, and it rules. It's a supplement to my desktop though, not a replacement. When I need the power, I have it. Personally I need the power often as I do things with my PC's most people wouldn't touch.

Yeah, I know that you and other high end PC gamers with $1000+ 133t rigs look down on tablet gaming but you have to understand that you guys are a minor niche these days. Big money is in tablets and tablet gaming and it will grow quite a lot unlike the PC gaming which won't grow as fast or won't grow at all. Problem is you don't understand that Apple invests a huge amount of R&D into the fastest (and at the same time cheap and efficient) tablet SoCs possible, their newest A6X chip is quite good at 3D and way, way better than tablet SoCs from just two years ago. With such amount of progress don't be surprised seeing tablet gaming going up significantly in profits and quantity/quality of content while PC side staying the same.

It's just that Apple and MS are looking at the future and you are looking at the past. It's that simple :)

It's not so much that I look down on tablet gaming, it's that most tablet games genuinely suck. Very few are worth my time of day. Ninety percent of them are word games, cut the rope, angry birds in some other scenario everyone wows over... these games are neat/fun for about five minutes and then quickly uninstalled. They are certainly NOT a replacement for my computer/console games. When I pick up my phone it's pretty much never to play games. Actually the only reason I have any games on it at all is so I have something to do while I'm sitting on the can at work. Yes tablet games will get better, this is obvious and I have absolutely no doubt that they will some day be what PC gaming is today. Thing is, your assertion that PCs are just going to stand still is dead wrong. Progress will be made. Hell, have a look at the newest cryengine stuff and tell me anything on your tablet comes close to it. Yes, SOC'S are great, but their focus is mainly on power efficiency and not on maximum performance. That's what makes them ideal for tablets and cellphones. PC's on the other hand could care less about power consumption for the most part, and therefor they can focus purely on performance. In fact it's only been in recent years that laptops became as "good" as desktops performance wise and that's still a stretch. You can by a laptop with an i7 and 16GB RAM sure, but it'll last you about 3 hours tops, cost a ton of money and is only about half to three quarters as powerful as a desktop at equal price (certainly can't touch my main system). There is no arm processor that can come close to touching anything even one of xeons can do, and there wont be for quite a few years because that's not their focus. By the time there is, my new xeons will be far superior. So really it's a question of how much processing power do we really need. As applications get smarter and AI becomes more standard and we demand complex tasks be faster and faster, well as always, the sky's the limit. There will always be (at least for the foreseeable future) a place for desktop and traditional laptops. They might not be as big a market as the tablets are but they aren't fading away into obscurity as some people would have you believe. Even Apple realizes it and that's why they still sell them.

In addition - most enthusiasts I know, hardcore PC gamers, really don't care about makup. For them, it is all about improving performance in games and apps, and overall system performance - boot/shutdown/restart times etc. Which, I think, W8 delivers nicely.

The removal of extraneous effects was a smart move by Microsoft. With the rise of responsive web design, gradients, transparency and other gloss are dying out and being replaced with a cleaner, geometric aesthetic. You only need to look at their rebranding to see evidence of that.

Not only does it make it easier for elements to resize and adapt to different devices, it speeds up the time it takes for the UI to draw, and saves battery life by requiring less computation to render.

Being as much of a gamer and enthusiast as I am I agree that the change has left some of use behind in not allowing for choices for us to utilize a more intense visual experience based theme. However, we aren't the average in the bell curve, we are the outliers, the 10%. MSFT as well as other companies are doing the same thing because we aren't the majority. However, it would be nice to be noticed for our spending for bleeding technology to keep technology moving faster.